Is Pyxus Legit, or a Pot Stock Phony? & Reasons for Recent Volatility

On today’s episode of Free Lunch, Associate Stock Strategist Ryan McQueeney describes reasons for recent market volatility and recaps the IMF’s cautious note on global economic growth. He also highlights analyst sentiment and recent news related to Alibaba. Later, the host tells the interesting story of tobacco producer turned pot stock Pyxus International.

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Free Lunch is presented by Zacks Investment Research. It is streamed live, four times per week, and features breaking news and analysis from Zacks strategists. Free Lunch is available on YouTube, Facebook Live, Twitter, Ustream, and more.

U.S. stocks were down once again on Wednesday morning, putting the S&P 500 on track for its fifth straight negative day and longest losing streak since November 2016. The major index has also dipped below its 50-day moving average for the fourth consecutive trading period and could close below the indicator for the first time in months.

Part of the issue here is rising bond yields and interest rates. However, Wall Street has also grown cautious about the state of the global economy over the past few days thanks to tepid sentiment from the International Monetary Fund.

The IMF said Tuesday that it was lowering estimates for global economic growth in 2018 and 2019. Then on Wednesday, the fund expanded on this warning with its full Global Financial Stability Form. This report cautioned that escalating trade and geopolitical tensions could trigger corrections in global capital markets and tighter financial conditions around the world.

This week’s selling has, at times, targeted tech stocks specifically, with investors especially quick to ditch Chinese tech giants like Alibaba BABA. Shares of BABA were sliding in morning trading Wednesday after KeyBanc Capital cut its price target for the stock to $215 from $220.

The firm warned that Alibaba’s New Retail vision is formulating slowly and causing near-term margin pressure. This note followed comments from founder and outgoing executive chairman Jack Ma, who suggested it was the U.S. that has that most to lose in its ongoing trade war with China.

Another hot story on Wall Street this week has been the emergence of a new trendy marijuana stock, Pyxus International PYX. Pyxus recently changed its name and shifted its focus to cannabis from tobacco, drawing comparisons to the blockchain adoption trend of early 2018.

But Pyxus has plenty of years of experience in the agriculture industry and a solid plan for its new business model, so it could end up being a legit play. Moreover, the stock has already received a rare bullish call from Citron Research, a notorious short-selling firm that apparently believes PYX could double from here.

Ryan digs into Pyxus’ plan to adopt a cannabis-first model and considers whether Citron might be right about the stock. He also recaps all of the other news stories listed above, sharing key facts and his own perspective. Don’t miss it!

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